Net equity inflows drop 41% month-on-month in June to Rs 5,988 crore

Investors take money off the table as markets hit new record highs

While equity funds witnessed net inflows for the fourth consecutive month in June, the quantum of flows slowed down with investors booking profits as markets touched new lifetime highs. Equity-oriented schemes witnessed net inflows of Rs 5,988.17 core in June, down by almost 41 per cent compared to May.

Gross redemptions stood at Rs 20,922.92 crore as against Rs 15,550.66 crore in May.

“When markets are going up investors keep on booking profits. Investors who have continued their investments through systematic investment plans (SIPs) for 10 years have also redeemed some portion, but are continuing with their SIPs,” said D P Singh, chief business officer at SBI MF.

However, fund mobilisation increased in June as compared to May which indicates that investors are continuing with the investments in equity funds irrespective of markets. In June, Sensex was up by 1.05 per cent, while Nifty gained 0.9 per cent.

In the last four months, equity schemes have seen cumulative net inflows of Rs 28,623.64 crore as investors defied volatility in the markets. May had seen net inflows of Rs 10,000 crore—highest inflows in 14 months.

In June, value funds and equity linked saving schemes (ELSS) saw net outflows in the equity category. While midcap and thematic funds received Rs 1,729 crore and 1,207 crore respectively-- highest inflows in the equity category.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar India said, “Significant improvement on the coronavirus situation in the country, along with improving recovery rate, pick-up in vaccination drive have provided comfort to investors. Additionally, a surge in markets despite challenges also boosted investor sentiment.”  

Amfi also disclosed that the number of mutual fund investors almost doubled to 23.9 million in June from 11.9 million in March 2017. The number of investors is counted by unique PANs (Permanent Account Numbers). The MF industry has added over 3.1 million investors in the last 15 months.

The investments through SIPs also increased in June compared to May. The SIP contribution in June stood at Rs 9,155 crore as against Rs 8,819 crore in May. The SIP AUM rose to Rs 4.83 trillion.

“Many new investors are seen embracing mutual funds through the SIP route, over other traditional investment avenues,” said NS Venkatesh, Chief Executive of AMFI. In June, SIPs saw record new registration at 21.29 lakh.

Apart from equity funds, hybrid schemes and other schemes (which includes passive and fund of fund investing overseas) saw net inflows of Rs 12,361.47 crore and Rs 5,850.43 crore respectively.

Even debt-oriented schemes saw net inflows of around Rs 3,566.39 crore in June. Money market funds saw highest outflows of Rs 13,987.73 crore in June followed by ultra-short duration funds and short duration funds. However, low duration funds, floater funds and overnight funds saw strong inflows in June.      

Overall MF industry saw net inflows of Rs 15,320.28 crore and net assets under management as on June stood at Rs 33.66 trillion.